Easier pricing for partly-paid shares, warrants: Sebi

The Securities and Exchange Board of India (Sebi) on Thursday allowed flexibility on pricing for issues of partly-paid shares...

Sebi board changed the requirements to minimum 25% on the number of public shareholders’ participation in a reverse book-building process compared with the requirement of achieving 50% of public shareholding earlier. (Reuters)

The Securities and Exchange Board of India (Sebi) on Thursday allowed flexibility on pricing for issues of partly-paid shares and warrants issued through both public and rights issues. The move is seen benefiting foreign investors and enabling fund flows into Indian markets. Currently, the part payment option is available only for rights issues.

Sebi has aligned the rules with a Reserve Bank of India (RBI) proposal released in July last year, allowing a minimum 25% upfront payment of the issue price for partly-paid shares within 12 months and 18 months in the case of warrants. The remaining amount can be paid within the next 12 months for issues smaller than Rs 500 crore. If the issue size is greater than Rs 500 crore, the period of part payment will be longer and decided by the issuer.

“In order to harmonise the norms on receipt of upfront payment and tenure of partly paid shares/warrants between the Sebi and Foreign Exchange Management Act (FEMA), the board has approved a minimum 25% upfront payment in partly paid shares,” a Sebi release said.

The board has tweaked the eligibility criteria for the recently amended share delisting norms, the market regulator stated in a press statement after its board meeting on Thursday.

“It is decided to add a provision that if the acquirer and the merchant banker are able to demonstrate that they have contacted all the public shareholders about the offer in the manner prescribed, then the condition of mandatory participation of 25% of the public shareholders holding shares in demat mode would not be applicable,” said the release.

On Thursday, the Sebi board changed the requirements to minimum 25% on the number of public shareholders’ participation in a reverse book-building process compared with the requirement of achieving 50% of public shareholding earlier.

The market regulator reduced the timeline on delisting to a minimum 76 days from 137 days earlier, and allowed the use of stock exchanges for delisting of shares. While the final guidelines are awaited, corporate lawyers opined that stock exchanges will be required to grant in principle approval within five working days as against 30 days under the current regime.

The board has also agreed in providing an additional eighteen months to companies exclusively listed on regional stock exchanges to list on nationwide exchanges, after many regional exchanges began shutting operations.

“In view their concerns and interest of shareholders of such companies, the Board decided to give time of 18 months. Many of their have expressed concern that they are unable to get listed on nation wide stock exchanges due to shortage of time in complying with the listing norms of nation wide stock exchanges,” the board said.

The board has allowed amendments to issue and listing of debt securities (ILDS) regulations to incorporate express provisions for enabling consolidation of debt securities as well as call and put options.

Sebi said that by enabling consolidation and re-issuance of debt securities, the illiquid and infrequently traded corporate bonds can be reissued, leading to the creation of a larger floating stock that can increase liquidity in the market. It added that by enabling call and put options, the issuer and investors would have flexibility in redemption of debt securities. Call and put options provide the option for early redemption of bonds.

New norms
* Timeline on delisting reduced to a minimum 76 days from 137 days earlier
* 25% upfront payment mandatory for partly paid shares issued in public offers
* Amendments to regulations governing issue and listing of debt securities cleared